Ukraine not to repay $3-billion debt to Russian Federation
KYIV, Ukraine-Ukraine said Friday that it would suspend repayment of a $3 billion bond to Russia, a move that the Russian government earlier said would provoke legal action against Kyiv.
President Vladimir Putin said he will protect Russians living in southeastern Ukraine from what he described as being “eaten up” by Ukrainian “nationalists”, according to an interview broadcast Sunday.
Alongside the sovereign debt, the Ukrainian government has made a decision to put on hold the repayment of a combined debt of $507 million that two Ukrainian state-owned enterprises owe to Russian banks.
Moscow and Kyiv have been locked in a bitter showdown over a Russian $3 billion loan granted to the pro-Moscow regime of ex-president Viktor Yanukovych in December 2013, not long before he was ousted and fled to Russia.
Ukraine has included the two-year bond in the external commercial debt it is restructuring to shore up its war-torn economy. Nevertheless, he used a conciliatory tone at times when addressing Russia’s relations with Ukraine Georgia within the marathon appearance in that lasted over three hours. But, separately, the Washington-based lender criticized Ukraine’s parliament Friday, accusing it of all but scuttling a tax-overhaul plan needed to unlock much-needed IMF funds.
Ukraine and Russian Federation are on a collision course over major trade and finance disputes, as the European Union prepares to extend sanctions against Moscow for annexing Crimea and fomenting a bloody conflict in eastern Ukraine.
Despite this, a default “does feed into broader concerns that the country’s International Monetary Fund programme is now at risk”, William Jackson, senior emerging markets economist for Capital Economics, said in a research note.
Late on Thursday, Ukraine’s Ministry of Finance said Kyiv couldn’t pay off Russia’s $3 billion Eurobond loan without breaking a debt restructuring deal reached with other worldwide creditors.
Kyiv claims Moscow has refused to discuss restructuring proposals.